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ANTI-MONEY LAUNDERING GUIDANCE FOR THE …

1 ANTI-MONEY LAUNDERING GUIDANCE FOR THE ACCOUNTANCYSECTORG uidance for those providing audit, accountancy , tax advisory, insolvency orrelated services in the United Kingdom, on the prevention of money launderingand the countering of terrorist by the ConsultativeCommittee of accountancy Bodies, in August ANTI-MONEY LAUNDERING GUIDANCE for the accountancy sector has beenapproved by Treasury (excluding Appendix A- Supplementary GUIDANCE for the TaxPractitioner, whichhas been submitted for Treasury approval separately). Guidancewhich is approved by Treasury is relevant GUIDANCE within the meaning of theMoney LAUNDERING Regulations 2007. Courts must consider relevant GUIDANCE whendetermining whether an accountant sconduct gives rise to certain offences undereither the Proceeds of Crime Act 2002 or the Money LAUNDERING Regulations is this GUIDANCE which practitioners should consider as authoritativewhenimplementing and complying withanti -money LAUNDERING GUIDANCE pr

1 ANTI-MONEY LAUNDERING GUIDANCE FOR THE ACCOUNTANCY SECTOR Guidance for those providing audit, accountancy, tax advisory, insolvency or related services in the United Kingdom, on the prevention of money laundering

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1 1 ANTI-MONEY LAUNDERING GUIDANCE FOR THE ACCOUNTANCYSECTORG uidance for those providing audit, accountancy , tax advisory, insolvency orrelated services in the United Kingdom, on the prevention of money launderingand the countering of terrorist by the ConsultativeCommittee of accountancy Bodies, in August ANTI-MONEY LAUNDERING GUIDANCE for the accountancy sector has beenapproved by Treasury (excluding Appendix A- Supplementary GUIDANCE for the TaxPractitioner, whichhas been submitted for Treasury approval separately). Guidancewhich is approved by Treasury is relevant GUIDANCE within the meaning of theMoney LAUNDERING Regulations 2007. Courts must consider relevant GUIDANCE whendetermining whether an accountant sconduct gives rise to certain offences undereither the Proceeds of Crime Act 2002 or the Money LAUNDERING Regulations is this GUIDANCE which practitioners should consider as authoritativewhenimplementing and complying withanti -money LAUNDERING GUIDANCE provides the accountancy sector with not only an interpretation of therequirements of the Money LAUNDERING Regulations 2007 (which became effectivefrom 15thDecember 2007)

2 And primary legislation relating to money launderingandterrorist financing but also practical GUIDANCE on good practice for matters notprescribed in GUIDANCE includes a number of minor changes made since the GUIDANCE wasissued in December 2007 (following the publication of an exposure draftin October2007).The GUIDANCE reflects not only law but the experience of morecomplex areas of customer due diligence, our GUIDANCE continues to be crossreferred to the GUIDANCE notes issued by the Joint Money LAUNDERING SteeringPO Box 433 Chartered Accountants' HallMoorgate Place, London EC2P 2 BJTelephone:020 7920 8100 Facsimile:020 7628 1874 Email: Institute of Chartered Accountants in England and WalesThe Institute of Chartered Accountants of ScotlandThe Institute of Chartered Accountants in IrelandThe Association of Chartered Certified AccountantsThe CharteredInstitute of Management AccountantsThe Chartered Institute of Public Finance and Accountancy2Gr , it is intended that, at least for most smaller practitioners, theguidance will be self contained and the need to refer to additional external materialwill be aid easy access.

3 Use is made of defined terms explained in a glossaryand eachsection is prefaced with key points for quick 2005- 2008 The Consultative Committee of Accounting BodiesAll rights contained in this document may be reproducedfree of charge in any format ormedium, subject to the conditions that: it is reproduced accuratelyand notusedin a misleading contextor for the principalpurpose of advertising or promoting a particular product or service or in any way thatcould imply that it is endorsed by the CCAB or itsindividual members; the copyright of theConsultative Committee of Accounting Bodiesis acknowledged; andNo responsibility for loss occasioned to any person acting or refraining from action as aresult of any material in this publication can be accepted by theCCAB of its third-party copyright materialhas been identified application for permission must bemade to the copyright 1 ABOUT AND INDIVIDUALSWITHIN THE SCOPE OF OF SUPERVISORY LEGAL REQUIREMENTS AND STATUS OF THISGUIDANCESECTION 2 THE IS MONEY LAUNDERING ?

4 LAUNDERING OF FAILURE TO and TIPPING OFF AN INVESTIGATIONKNOWLEDGE AND it Knowledge or Suspicion? 233 Reasonable grounds for Knowledge WITH MONEY LAUNDERING REGULATIONSSECTION 3- ANTI MONEY LAUNDERING SYSTEMS trainingSECTION 4 THE RISK BASED APPROACH TO CUSTOMER DUEDILIGENCERISK ASSESSMENT AND and RISK-BASED and applying a risk-based approachSECTION 5 CUSTOMER DUE THIS IS IS THE MEANING OF CUSTOMER DUE DILIGENCE? IS A BENEFICIAL OWNER?APPLICATION AND TIMING OF CUSTOMER DUE tobe taken before entering a relationship/carrying out atransaction) delay may be compliance (client refusal) client due RISK-BASED APPROACH TO CLIENT DUE due due exposed persons (PEPs) on third partiesCONDUCTING CUSTOMER DUE your client (KYC) customer due diligence evidence used in the verification of identityCertification and casesSECTION 5A- Specific prompts for clientsA.

5 For entities/businessesB. For individualsSECTION 5B Examples of risked-based or regulated and similar services businessesSECTION 6 INTERNAL MUST BE REPORTED? OF Protected Authorised ReportingRECOGNISING MONEY Key whether and when to ReportHOW TO Reports to the to SOCASECTION 7 Role of MLRO and SAR INTERNAL Reporting EXTERNAL PRIVILEGE REPORTING of Privileged and Discussion with Crime/Fraud ExceptionSECTION 8 FOR OF FOR AND RECEIVING of FOR BANKS AND DEPOSIT TAKERSSECTION 9 POST SAR ACTIONSCONTINUING WORK IN CONNECTION WITH A REPORTED Professional Work and POCA RequirementsREQUESTS FOR FURTHER INFORMATION6 Requests arising from a change in professional appointment (professionalenquiry)

6 FromSOCAor Law Enforcement regarding identification regarding suspicious PROTECTION ACT- SUBJECT ACCESS REQUESTSGLOSSARYG lossary Annex A The Specified Disclosure ObligationsGlossary Annex B- HM Treasury consolidated list of persons designated as beingsubject to financial A- Supplementary ANTI-MONEY LAUNDERING GUIDANCE for Tax Practitioners7 SECTION 1 ABOUT THISGUIDANCEKEY POINTS UK ANTI-MONEY launderingregimerequirements are set out in the Proceeds of Crime Act2002 (POCA)(as amended by the Serious Organised Crime and Police Act 2005(SOCPA)),the Money LAUNDERING Regulations 2007 (2007 Regulations)and theTerrorism Act 2000 (TA 2000)(as amended by the Anti-Terrorism, Crime and SecurityAct 2001 (ATCSA2001)and the Terrorism Act 2006 (TA 2006)).

7 HM Treasury approval for thisGuidancehas been granted. As suchthe Courts musttake it into account in deciding whether or not an offence has been committed underss330-331,POCAor the2007 Regulationsby anindividualorbu sinesswithin its scope. Businessesandindividualsshould take account of thisGuidancewhen acting in thecourse of business as auditors,external accountants,insolvency practitioners andtaxadvisers, and when acting in the course of business as trustand company to do so could have serious legal, regulatory or professionaldisciplinary consequences. Where other professional or trade bodies have produced specialistGuidanceconcerningparticular services or activities,businessesandindividualsmay need, to have regard tothatGuidanceas a supplement to that appear initalicsin thisGuidanceare explained in the been drafted to be consistent with theGuidancefor the UKfinancial sector issued by the Joint Money LAUNDERING Steering Group (JMLSG).

8 Some of the material contained in this guide draws significantly onJMLSG wording,for which thanks are due to theJMLSG. TheJMLSGG uidanceis verycomprehensive, and wherebusinessesorindividualsrequire further GUIDANCE , theymay seek it from outdefined serviceswho follow theJMLSGG uidance, adapted for the circumstances inwhich they are practising, will be deemed to have followed been prepared to assist accountants and relatedbusinessesandprofessionals in complying with their obligations, arising from United Kingdomlegislation, in relation to the prevention, recognition and reporting THE SCOPE OF addressed tobusinessesandindividualscovered by Regulation 3(1)(c)

9 Of the2007 Regulationsie, those who act in thecourse of a business carriedon by them in the United Kingdom as an auditor,external accountant,insolvencypractitionerortax adviser(as defined in Regulation 3(4) to 3(8)), and those who actin the course of business as trust or company service providers under Regulation 3(1)(e) of the2007 Regulations(as defined in Regulation 3(10)). These services arereferred to together for the purpose of thisGuidanceas provide both accountancy services and trust or company servicesand that are supervised by HMRC should generally follow the thisGuidancebut also8have regard to Appendix 10: Supplementary GUIDANCE for trust or company servicesproviders of the HMRC guide MLR 8- Preventing money LAUNDERING and terroristfinancing.

10 Not addressed toindependent legal professionals, even where theyare acting astax advisers,insolvency practitioners or trust or company legal professionals should refer toGuidanceissu ed by theirprofessional body oranti-money LAUNDERING supervisory sub-contracted parts of their work for clients to otherindividualsorbusinessessituated outside of the United Kingdom, it is likely that those others will be subject tolocal ANTI-MONEY LAUNDERING law and not to United Kingdom law in respect of the workundertaken by them. However, the responsibility of United Kingdombusinessesandindividualsfor compliance with the 2007 Regulations andPOCA and TAin r espect ofthe conduct of their business, and in respect of information or other matters comingto them in the course of conducting that business, remains whether or not parts ofthe work are 6 Regulation 3(7) definesexternal accountantas someone who providesaccountancyservicesby way of business to other persons, when providing such services.


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